AARON FERER & SONS CO., Debtor and Debtor in Possession, Appellant, v. AMERICAN COMPRESSED STEEL CO., Appellee. AARON FERER & SONS CO., Debtor and Debtor in Possession, Appellant, v. PHILLIPS STEEL & METALS COMPANY, INC., Appellee.
Nos. 76-2104 and 76-2105
United States Court of Appeals, Eighth Circuit
Submitted Sept. 1, 1977. Decided Nov. 9, 1977.
564 F.2d 1206
Thomas F. Flaherty, Omaha, Neb., argued, and filed brief, for appellee, American Compressed Steel Co.
William A. Tinstman, Omaha, Neb., argued and filed briefs, for appellee, Phillips Steel & Metals Co.
Before BRIGHT, ROSS and HENLEY, Circuit Judges.
HENLEY, Circuit Judge.
Appellant, Aaron Ferer & Sons Co., seeks reversal of the orders of the district court1 dismissing, for lack of in personam jurisdiction, appellant‘s complaints against appellee corporations, American Compressed Steel Co. and Phillips Steel & Metals Company, Inc. We affirm.
These consolidated appeals are yet two more in a series recently submitted to this court and resulting from litigation undertaken by Aaron Ferer following its filing in 1974 of a petition for arrangement under Chapter XI of the Bankruptcy Act.2 In 1976 appellant filed a number of separate complaints, including the two now the subject of this appeal, alleging it had made voidable preferential transfers,3 and asserting jurisdiction in the district court under the Nebraska long-arm statute.4 Both American Compressed Steel Co. (ACS) and Phillips Steel & Metals Company, Inc., appellees in the instant appeal, challenged the court‘s in personam jurisdiction, and filed respective motions to dismiss which were granted by the district court.
The sole issue presented is whether application of the Nebraska long-arm statute to the facts of the cases before us offends due process. The appropriate law was set forth in our previous opinion, Aaron Ferer & Sons Co. v. Atlas Scrap Iron & Metal Co., 558 F.2d 450 (8th Cir. 1977), in which we upheld the district court‘s dismissals of four nonresident defendants on grounds that due process was not met in applying the Nebraska long-arm statute. The test or due process is to question whether nonresident defendants have sufficient minimum contacts with the forum state so as to comply with traditional notions of fair play and substantial justice, see International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945); whether defendants have invoked the benefits and protections of Nebraska law by their activities in that state, see Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); and, because these cases involve contract disputes, whether the contracts have a substantial connection with the forum state, see McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957).
With respect to the Nebraska long-arm statute, we noted the declaration made by the Supreme Court of Nebraska in Stucky v. Stucky, 186 Neb. 636, 185 N.W.2d 656, 659 (1971), that the language of the long-arm statute clearly indicates the legislative intention to apply the minimum contacts rule where it does not offend traditional concepts of fair play and substantial justice. Aaron Ferer & Sons Co. v. Atlas, supra, 558 F.2d at 453. We further recognized that the reach of the Nebraska long-arm statute is limited only by the constitutional constraints imposed by the minimum contacts rule. Id. See Vergara v. Aeroflot “Soviet Airlines,” 390 F.Supp. 1266, 1270 (D.Neb.1975).
In applying the minimum contacts rule, we consider the following factors operative in determining whether the requirements of due process are satisfied adequately to invoke personal jurisdiction under a long-arm statute: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties. Aaron Ferer & Sons Co. v. Atlas, supra, 558 F.2d at 453; Caesar‘s World, Inc. v. Spencer Foods, Inc., 498 F.2d 1176, 1180 (8th Cir. 1974).
The record before us indicates that Aaron Ferer, ACS and Phillips are all traders of various ferrous and nonferrous metals. Aaron Ferer is a Nebraska corporation with its principal place of business in Omaha. ACS is a New York corporation which has offices in Kansas City, Missouri, and Phillips is a Kansas corporation with its principal offices in Coffeyville, Kansas.
Prior to filing its Chapter XI petition in bankruptcy, Aaron Ferer and ACS had engaged in a course of metal trading for a period of fifteen years for an aggregate amount of $500,000.00. Much of their dealing was of the variety just described which ACS refers to as “broker-type” contracts, characterizing its own function as that of a middleman, buying from the mill and reselling to Aaron Ferer so that Ferer would not have to pay for the metal in cash in advance, which was required to purchase directly from the mill. The two contracts between Aaron Ferer and ACS here in dispute arose from this “broker-type” arrangement. They were prepared in the “typical” manner by Aaron Ferer in Omaha, Nebraska on Ferer‘s own forms on March 29 and April 2, 1974, and provided for shipment to Ferer‘s designated purchasers. As in other contracts of this type, the shipments did not go to or through the State of Nebraska, but traveled directly to Ferer‘s subsequent purchasers, FOB Armco Steel Corp. in Kansas City, Missouri, and FOB Lone Star Steel Co., Bond, Texas, respectively.
The transactions between Aaron Ferer and ACS were apparently not limited to the “broker-type” contracts. On occasion, Aaron Ferer also sold metal clips to ACS. Metal clips must be baled preparatory to delivery to a steel mill, and because Aaron Ferer did not have the necessary equipment to bale metal clips, it sold the clips to ACS which in turn processed them for consumption by a steel mill. Though the potential sale of clips was discussed by the parties on a monthly basis, contracts were not necessarily made that often. When a sale was arranged, the metal clips would be shipped from wherever they happened to be located, usually outside the State of Nebraska, to ACS in Kansas City. Aaron Ferer, however, has called the court‘s attention to two instances in 1973 when shipments of metal clips bound for ACS originated in Omaha, Nebraska.
Trading between Aaron Ferer and Phillips had been conducted for two years prior to the disputed contracts, reaching an aggregate amount of $75,000.00. Characteristically, the purchase contracts at issue were negotiated by telephone, and on March 28 and April 5, 1974 sent on Aaron Ferer forms to Phillips in Coffeyville, Kansas, for execution. The contracts reflected that each order was to be shipped to Aaron Ferer‘s subsequent purchaser at the purchaser‘s address, Armco Steel Corp. in Sand Springs, Oklahoma, and Griffin Wheel Co. in Kansas City, Kansas, respectively.
As were these disputed transactions, virtually all of the dealings between Aaron Ferer and Phillips were in the nature of the “typical” transaction described previously which included shipment to Aaron Ferer‘s designated purchaser who was ordinarily located in a state other than Nebraska. Appellant, however, has pointed out two occasions when shipments apparently were received by Aaron Ferer in Omaha, Nebraska. One contract, dated February 16, 1973, and marked FOB Coffeyville, Kansas, provided that Aaron Ferer was to advise shipping instructions. A later bill of lading indicates the destination as Omaha, Nebraska. The bill of lading for another contract dated April 10, 1972, and also FOB Coffeyville, Kansas, reflects shipment on a railroad car bound for Chicago, Illinois, which stopped in Omaha, Nebraska for partial unloading.
Evaluating the disputed contracts between Aaron Ferer and the appellees in light of the minimum contacts criteria set forth above, we find that neither ACS nor Phillips had sufficient contacts with the State of Nebraska to satisfy the due process requirements necessary to assert in personam jurisdiction over either of them under the Nebraska long-arm statute.
The transactions in suit did involve telephone calls and exchanges of correspondence, contracts, invoices and negotiable instruments between Aaron Ferer in Nebraska and ACS in Missouri and Phillips in Kansas. However, we noted with approval in our previous Aaron Ferer opinion the apt observation made by the district court that “the use of arteries of interstate mail, telephone, railway and banking facilities is insufficient, standing alone, to satisfy due process.” Aaron Ferer & Sons Co. v. Atlas Scrap Iron, supra, 558 F.2d at 453.
Appellant Ferer argues that application of the Nebraska long-arm statute to obtain in personam jurisdiction over the appellees in these cases is justifiable on grounds that a long-term course of dealing had been developed between the appellant in Nebraska and the appellees in Missouri and Kansas with the respective relationships including some transactions in which the appellee had had significant contact with the forum State of Nebraska. The appellant contends that a well-established course of dealing coupled with some previous contact between the appellees and the forum state is sufficient to satisfy the jurisdictional requirements in the instant cases. We do not agree.
Out of the fifteen years of trading with ACS, Aaron Ferer has directed our attention to only two contracts under which metal moved from one party to the other through the State of Nebraska. The two contracts are not involved in this appeal, and, according to the record, are not even of the same “broker-type” variety as the ones here in dispute. Similarly, Aaron Ferer has pointed to only two contracts with Phillips which involved shipments through Nebraska. As stated, both shipments were FOB Coffeyville, Kansas, where Phillips is located. We do not now decide whether these few scattered contracts involving past shipments through Nebraska may have provided contacts sufficient to justify Nebraska jurisdiction with respect to those transactions. We note only that those contracts are totally unrelated to the complaints in the cases here on appeal, and we find that they do not represent contacts between the appellees and the State of Nebraska sufficient to justify asserting jurisdiction under the long-arm statute or to fairly require appellees to defend themselves in a Nebraska forum.
To assess compliance with due process, with respect to jurisdiction in a particular case, the minimum contacts relied upon must be between the defendant and the forum state, not simply between the defendant and a resident of the forum state. Standing alone, previous dealings with a resident appellant, absent other contact with the forum state, cannot be used as the basis for establishing jurisdiction over a nonresident appellee. Aaron Ferer & Sons Co. v. Atlas Scrap Iron, supra, 558 F.2d at 455 n.6; see Hanson v. Denckla, supra, 357 U.S. at 250-55.
The orders of the district court dismissing Aaron Ferer‘s complaints against ACS and Phillips for lack of jurisdiction are affirmed.